I read a short discussion paper this morning – What model for the future of the eurozone? Critical actions – released by France Stratégie, which is formally known as the Commissariat général à la stratégie et à la prospective (CGSP). It is a government body attached to the Prime Minister’s office. It was created in April 2013 Its mission is to provide broad discussion parameters to aid future policy directions for the French government. The discussion paper provides nothing new and seems to avoid the realities of the European cultural and historical milieu that really dominates or constrains (whichever way you want to think about it) the possible routes back to prosperity for the continent. It lists three options for reforming the Eurozone: (a) Return to original principles (Maastricht 2.0) where nations were fiscally separate and there would be no bailouts; (b) Reinforced fiscal integration with “joint liability for sovereign debt” and control of “national parliaments’ fiscal sovereignty’ by some European-level institution (Commission/Parliament); and a (c) a US federal model. They are motivated by the conclusion that the current situation is “ineffective”, which is a euphemism for total dead-in-the-water failure. They do not broach the most obvious and, in the long-run, best solution, which is consistent with the cultural and historical realities – orderly breakup and return to true currency sovereignty. So the discussion paper really offers very little by way of a path out of the maresme that the elites in Europe have created to line their own pockets at the expense of everyone else.

Data released by Eurostat (October 20, 2016) – EU28 current account surplus €13.5 bn – shows that the EU28 ran a significant current account surplus in August 2016 following a surplus of €11.3 billion in July. The August result is up €5.3 billion on August 2015. Net trade in goods and in services is more or less equally balanced. The stunning result is that the German current account surplus in August 2016 was €17.87 billion up from €14.43 billion in August 2015., while the next largest Eurozone Member State surplus was Italy at €3.37 billion. Germany is also running a fiscal surplus of around 1.2 per cent of GDP at present, which means the private domestic sector is saving massive amounts, which, in turn, not only results in subdued demand within Germany (and low growth) but also reduces import spending. In turn, this reduces growth in other nations. The stunning fact is that the European Commission is doing nothing about this massive imbalance despite Germany being in serial contravention of the rules relating to macroeconomic imbalances. The Brussels jackboot is quick to kick Greece but stays well away from sanctioning Germany, even though the German behaviour is much more deleterious to the viability of the common currency.

There was an interesting interview published in the financial market journal Central Banking this week with Otmar Issing, who was the ECBs first chief economist and a former European Central Bank executive board member. He predicted that as a result of the political corruption of the monetary union ideal, “the house of cards will collapse.” He was referring to the claim that the ECB has become captured by politicians and technocrats in the IMF and the European Commission such that it is now violating essential central banking principles, in addition, to Treaty obligations that were designed to safeguard the financial stability of the system. I have some agreement with his overall view that a federal solution to the Eurozone ills is not viable. But I do not agree that the ills of the Eurozone stem from recent political decisions – to pressure the ECB to engage in QE or other interventions. The reality is that the flawed design of the Eurozone, which reflected the ideological hold of neo-liberalism on the integration discussions in the 1980s and beyond, meant that the only effective fiscal capacity in the currency union was held by the ECB. If the ECB had not started buying up government bonds in May 2010, the monetary union would have collapsed about then. The whole problem is that neo-liberalism brought these Member States together into a monetary architecture that was doomed from the start.

After all the hoopla last year with the rise and fall of Syriza one’s attention span strays from what is happening in Greece at present and how it demonstrates the continued (and permanent) failure of the Eurozone. We also become inured to badness after badness is normalised. I was reminded of the depth of the malaise in that nation last week when I was in Kansas City. I won’t disclose confidences but an influential person (in the Greek context) I spoke to now regard their previous support for remaining within the Eurozone as a mistake and they consider my assessment of the situation (which they opposed at the time) to be closer to reality. That was an interesting conversation and credit to them for being able to recognise an error of judgement. I was also reminded of the absurdity of the Eurozone when the IMF released its latest – Greece: Staff Concluding Statement of the 2016 Article IV Mission (September 23, 2016). This is normalisation of badness in bold! The current thinking is that the Greek unemployment rate will remain in double figures until at least 2050, that business investment has collapsed, real GDP is around 27 per cent below its pre-GFC level – and – more significant and accelerated austerity is required. If an organisation can exhibit psychopathy then the IMF has it!